DiscussWorldIssues - Socio-Economic Religion and Political Uncensored Debate - View Single Post

**nvideoe** · 08-03-2011, 04:42 PM

If as a part of your employment contract, your employer was paying into your retirement plan and paying your health care, and then you had to pay some of your health care and you had to pay into your retirement, because your employer paid less, your paycheck is smaller, because your pay got cut.

The employer contribution is a part of your pay package.

If it gets cut, that's a pay cut.

Most public service pension plans are "Defined Benefit" plans. The idea is that the beneficiary will receive a specific payout at retirement based on some factor, usually salary. At the time the beneficiary begins receiving payments the payments are 100% taxable if they haven't contributed to the plan. If they DO contribute to the plan then only a portion of those benefit payments are taxable upon receipt as the portion that the employee contributed was paid in with after tax dollars. The effect is that the person contributing to their own defined benefit plan DOES get their money back so it's not a pay cut but, rather, a deferral.

08-03-2011, 04:42 PM	#5
nvideoe Join Date Oct 2005 Posts 489 Senior Member	If as a part of your employment contract, your employer was paying into your retirement plan and paying your health care, and then you had to pay some of your health care and you had to pay into your retirement, because your employer paid less, your paycheck is smaller, because your pay got cut. The employer contribution is a part of your pay package. If it gets cut, that's a pay cut. Most public service pension plans are "Defined Benefit" plans. The idea is that the beneficiary will receive a specific payout at retirement based on some factor, usually salary. At the time the beneficiary begins receiving payments the payments are 100% taxable if they haven't contributed to the plan. If they DO contribute to the plan then only a portion of those benefit payments are taxable upon receipt as the portion that the employee contributed was paid in with after tax dollars. The effect is that the person contributing to their own defined benefit plan DOES get their money back so it's not a pay cut but, rather, a deferral.
	Quote